The National Institute of Statistics and Economic Studies (STATEC) recently estimated that the rising inflation will require two to four index cuts to be made in the span of just ten months. Whichever scenario comes to be, there is also still the last wage increase, which was postponed in last tripartite agreement, that needs to be added.
“Extreme times require extreme measures”, underlined Minister for Energy Claude Turmes earlier this week in an RTL Television appearance. Prime Minister Xavier Bettel shared similar views in a press briefing that followed two bilateral meetings with employers and unions on Wednesday.
“The Sky is not the limit and we cannot risk getting to a place where we question the financial stability of the country”, noted the PM.
While Bettel was unwilling to discuss costs of support measures, he made it clear that the public debt is not to exceed 30% of the gross domestic product: “It is part of the coalition agreement that we do not exceed 30 [percent].” It is the job of a prime minister to ensure that a coalition agreement is respected, Bettel further noted.
Read also: Minister Haagen questions aim of keeping state debt below 30% of GDPThe PM also warned that the Grand Duchy is at risk of losing its Triple A rating if the debt gets too high: “It would be dangerous to put the Triple A at risk. That is why it has to be assessed how much leeway there is, but we are aware that we should not be saving fetishists in the given situation.”
Last year, public debt was 24.4% of GDP. Nora Back, president of the Independent Luxembourg Trade Union Confederation (OGBL), has no doubt that people urgently need help. The union thus firmly holds on to the index system.
Back also shared her belief that businesses are not suffering as much as they are often portrayed to be: “According to our data, 70% of businesses have stable activities. 70%! 20% of them indicated that their activities are increasing. This means there are only 10% that say their occupation levels have decreased. In terms of purchase orders, 90% indicated being fully booked and only 10% said that they have fewer orders, not zero:"
Employers’ representatives do not share the estimations made by the OGBL. Earlier this week, Michel Reckinger, president of the Luxembourg Employers’ Association UEL, noted the following: “What do we need and who needs what to get through this mess, then we assess how much it costs, and then we decide how to finance it. I already said the index is like taking headache medication, but our economy has diarrhoea.”
It thus seems as though the goal of the upcoming tripartite session will be to find the right pill for everyone. And these discussions in return will certainly provoke one or two new headaches.
